Catherine Posted February 16, 2010 Report Share Posted February 16, 2010 Have an S-corp that folded, still owing a few pretty pennies to the shareholders. How do I deal with those? Too tired to think right now. Thanks all, and I think it's time to go to sleep. Snow overnight so I'll have to shovel before the first client shows up at 8:30. And if I get shoveled out that client will, of course, cancel. Catherine Quote Link to comment Share on other sites More sharing options...
OldJack Posted February 16, 2010 Report Share Posted February 16, 2010 How would you file the return if it was not a shareholder loan. If the S-corp cannot pay the loan it just stays on the final return as a liability. The shareholder then has a loss to deduct on his 1040. Quote Link to comment Share on other sites More sharing options...
Catherine Posted February 18, 2010 Author Report Share Posted February 18, 2010 But how do I report this? There's no clear place for it on the K-1 -- Line 8a as a long-term loss so it can go to the personal Sch D as a business loss? Or does it not go through the K-1 at all? In which case, where and how is it reported? Quote Link to comment Share on other sites More sharing options...
Maribeth Posted February 18, 2010 Report Share Posted February 18, 2010 The loss is not at the corporate level, it is at the shareholder level. The shareholder had $XXX due to him from the corporation. The shareholder also had $XXX invested in the corportation. The capital loss is then determined and taken on the shareholder's return. Maribeth Quote Link to comment Share on other sites More sharing options...
Catherine Posted February 18, 2010 Author Report Share Posted February 18, 2010 The loss is not at the corporate level, it is at the shareholder level. The shareholder had $XXX due to him from the corporation. The shareholder also had $XXX invested in the corportation. The capital loss is then determined and taken on the shareholder's return. Maribeth So there is no specific documentation due to the shareholders from the corporation? Quote Link to comment Share on other sites More sharing options...
Maribeth Posted February 18, 2010 Report Share Posted February 18, 2010 So there is no specific documentation due to the shareholders from the corporation? There is no form or document that I am aware of that the corporation has to submit to the shareholder. I would surmise that the shareholder is already aware that they have a loss. Maribeth Quote Link to comment Share on other sites More sharing options...
imjulier Posted February 19, 2010 Report Share Posted February 19, 2010 K-1 basis tab should document this if you've been keeping up the basis calculation year-to-year. It doesn't have to be provided to the SH but I'd keep it in order to document the Sch D loss. Otherwise, I would agree with maribeth that its an off-the-record calculation and just keep notes on why you did what you did. Julie Quote Link to comment Share on other sites More sharing options...
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